Financial advisors’ sentiment towards the global economy turned negative in Q2 across all regions, with confidence levels falling to a below-average score of 4.9 out of 10 - the lowest score recorded in the last 12 months - according to Skandia International’s International Advisor Confidence Barometer.

European and UK advisors reported a “sharp drop” in confidence levels, with those based in the UK showing the biggest decline, averaging a score of just 4.8 out of 10, down from 5.5 in Q1. These regions also reported below-average confidence in their local economies, compared to advisors in Asia who are “significantly more confident in their local economies than the global economy”, Skandia International said. 

With a score of 6.8 out of 10, advisors in Singapore reported the highest confidence levels. This reflects confidence in several asset classes, with emerging Asia equities most likely to deliver the best investment returns over the next year, followed by “other” emerging markets equities and North American equities respectively.

Impacts of continued volatility, unpredictable behaviour of global stock markets in Q2

Over half of the advisors surveyed said their clients had become more risk-averse, thus investing less during the period; almost 75 per cent of advisors referred to the European debt crisis as the biggest threat to economic growth. Meanwhile, rising unemployment and government spending cuts were considered the next most likely factors to contribute to further stalling economic growth.  

Phil Oxenham, marketing manager at Skandia International, said it is encouraging to see that advisors in Singapore remain upbeat about the prospects of their economic region. 

“Clearly, the fears of global contagion and the continued instability within the eurozone are troubling investors far and wide, including in Singapore - despite the healthy state of their region,” Oxenham said. “However, it is important to recognise that depressed markets create investment opportunities which can reward those willing to accept some short-term volatility.”